The world of technology continues to expand and with it, various risks surrounding its use. From Facebook to Yelp, social media can be a powerful tool to connect with customers, but if poorly managed, can lead to damaging risk in your organization.
In December 2013, the Federal Financial Institutions Examination Council (FFIEC) published “Social Media: Consumer Compliance Risk Management Guidance.” This guidance does not impose new regulatory requirements on financial institutions, but it does provide financial institutions with expectations for managing risks associated with using social media. The guidance provides insight on how the use of social media impacts already existing regulations.
A financial institution’s social media risk management program should consist of methods to identify, measure, monitor and control risks associated with its use. The more involved an organization is in social media, the more robust their program should be. Even if an organization chooses not to actively participate in social media spaces, they cannot ignore the possible risks that may arise from others using it to express negative comments or complaints about the organization.
Components of a strong social media risk management program include:
Risk Profile Likely to Change
An organization’s risk profile can take on an entirely new look when engaging in social media—increased compliance, operational, and reputation risk can result. The same requirements outlined in existing regulations apply when delivering products and services through a social media network. Whether you allow customers to open a deposit account or apply for a loan, the same rules followed when conducting these activities through more traditional venues apply when delivering them using social media.
Some regulations to consider when offering deposit and loan products through social media include:
As you embark on this journey through the unlimited boundaries of social media, think carefully about how its use aligns with your organization’s strategic goals and what you intend to accomplish through its use. Carefully evaluate the impact this journey could have on your organization’s compliance, reputational, and operational risks and whether the benefits outweigh the added risk. Properly managed, the world of social media can provide endless opportunities and expand your outreach beyond what could be realized through more traditional channels.